Drosophila harbors the largest known variety of chromatin insulator complexes including the functionally distinct gypsy and CTCF/CP190 classes, specified by the zinc-finger DNA binding proteins Su(Hw) and CTCF respectively. Our previous work showed that certain RNA silencing factors affect gypsy insulator activity. Because the gypsy and CTCF/CP190 classes of insulator complexes share the CP190 protein component and are proposed to utilize common mechanisms, we tested whether RNA silencing plays a general role in insulator activity by examining the effect of RNA silencing mutants on the CTCF/CP190 dependent Fab-8 insulator of the bithorax complex. Starting with a comprehensive genetic approach, we found that Argonaute2 (AGO2) but not other RNA silencing components are required for Fab-8 insulator activity. AGO2 and CP190 interact physically, and genome wide localization of AGO2 by chromatin immunoprecipitation followed by Illumina sequencing reveals extensive colocalization of AGO2 with CTCF/CP190 and other insulator proteins. However, AGO2 exhibits minimal overlap with regions of small interfering RNA (siRNA) production. Finally, depletion of either CTCF or CP190 results in loss of AGO2 association with insulators and other cis-regulatory regions. Our findings identify a novel nuclear role for AGO2 and suggest that Dicer and siRNA-independent recruitment of AGO2 to chromatin by insulator proteins promotes the definition of transcriptional domains throughout the genome.